The Rise of CTV and OTT Advertising and What It Means for Marketers (Performance Marketing Roundup March 2024)
This article is part of a monthly series that highlights news and innovation impacting the performance marketing space.
According to eMarketer, OTT (including digital pay TV services like YouTube TV and Sling TV) will account for more than half of US video subscription revenues by 2025, when it will reach $72 billion.
That growth is coupled with the rise of ads on streaming platforms, creating an interesting opportunity for marketers.
While Netflix pioneered the streaming space in 2007, the industry grew significantly in 2019/2020 with the launch of Disney+, Apple TV+, Peacock, and HBO Max, and continued to see exponential growth through the COVID-19 pandemic. Disney+, for example, grew from 74 million subscribers in October of 2020 to 164 million by October 2022 (source: TWDC Annual Reports). Meanwhile, Disney’s domestic cable subscribers (Disney Channel, ESPN, Freeform, FX, etc.) declined from 85 to 74 million over the same period.
Rapid growth has brought significant growing pains, though, as streamers have shuttered (CNN+ ceased operations in 2022 after just one month), consolidated (HBO Max and Discovery+ became Max in May 2023), shed subscribers (Disney+ lost 11.7 million subscribers in their fiscal third quarter of 2023), and reported financial losses in the billions of dollars.
While consolidation is likely to continue, another tactic that streamers are using to turn a profit is adopting ads. Amazon Prime Video was the latest streamer to roll out ads on its service in January 2024; viewers in the US can choose to pay $3/month for an ad-free tier.
According to eMarketer, consumers are okay with ads if it means they’ll be able to access content for free, or at least a reduced fee. This is good news for marketers looking to reach movie and TV viewers amidst the decline of traditional cable TV. eMarketer forecasts that programmatic digital display ad spend will reach $157 billion in 2024, which is a 15.9% increase YoY.
Advertising on CTV devices and OTT platforms has particular advantages over traditional TV advertising, like advanced targeting, real-time analytics, and increased efficiency. Streaming ad formats also allow for interactivity, offering marketers more opportunities to deepen customers’ interactions with their brand. And with more NFL games shifting to streaming, like Thursday Night Football on Amazon Prime Video, streaming ads have the opportunity to show up in highly viewed, premium content.
Are you considering adding CTV and OTT advertising to your media mix? If so, we’d love to hear from you.
